Kill yr ads… the don’ts of iPhone app marketing

As I’m writing this, our iPhone app, Camera+, is ranked #3 Top Paid in the US App Store, selling over 1,300,000 copies and netting over $1,300,000 since debuting in the App Store about 9 months ago. We’ve accomplished this without spending a single dime on advertising.

In the two years that the App Store has been in existence, we’ve gotten tons of attention, both because we’ve had a string of highly successful apps, and because we’ve been very open about our sales figures and marketing strategies. Much of that attention has been, and still is, driven to some of our earliest posts regarding sales figures and marketing. The unfortunate thing is that the App Store climate has drastically changed from those early days so if you’re an iPhone app developer and try to mimic what we did early on, you’ll quickly find yourself in the poor house.

So, I figure that it’s now time to update you on the state of things in order to prevent you from making some very costly mistakes.

We stopped advertising

As I mentioned in my post about Camera+’s first month sales, we simply don’t do any advertising anymore. This is both for tap tap tap and for our other business, MacHeist. In the past, we’ve put in over $25,000 per month for advertising our iPhone apps and we’ve spent well over $100,000 just on ads over a very short timeframe to promote a bundle of Mac software. So we’re no stranger to advertising.

Why’d we stop? Read on…

The ad racket

Some people will pay whatever amount they’re quoted for ads. And this is where the trouble begins for the smaller, independent developer. For example, we were originally quoted rates that were literally 15 times what we actually paid for Macworld banner ads. There was no way in hell we’d be able to make them work at anywhere near the quoted rate.

But there are big companies that have that kind of budget (you know… the printer companies, etc) and look at advertising as the traditional “conservative investment”, meaning you have to continuously do it over a long duration in order to thrive in the long run. So you’re competing with them for price.

As long as there aren’t enough of them to take over all of the available ad inventory, you have some room to negotiate your rate. But then bring in the VC-driven iPhone companies, and the smaller developers who don’t know any better (the supply of these devs is almost infinite because of the sheer number of devs in general creating apps for the iPhone), and you can easily see that they’ll price you right out of the market… that is, unless you’re naïve enough to pay much more for the ads than you’ll ever be able to recoup.

If the market conditions are favorable toward advertisers, it’s possible to get a good deal where you can actually make a return on your investment as we were able to do during the dawning era of the App Store. But if they’re not, and it’s a “seller’s market”, you need to be extremely cautious or you’ll put your company at big risk.

This is a very simple principle, but it’s amazing how many people don’t follow it…

Don’t invest in something if it’s not going to pay off.

Your “brand” is insignificant

With regard to the “advertising is a conservative investment” thing, this is basically something an ad rep will try to beat into your head in order to land a long-term client. It might make sense for the Electronic Arts and Activisions of the world where the brand itself is what drives much of the company’s sales, but if you’re something small like a tap tap tap or pretty much every other indie developer out there and most of the world has never heard of you, it just doesn’t make much sense.

When you’re a small company, you as the business owner are essentially the only person in the world who cares about your company brand/name/logo/etc (the classic newbie first move when someone starts a business is to have T-shirts and buttons and pens made with the shiny, new company logo on them). Realize this and it’ll help you to make wiser decisions when promoting your products. We go so far as to not even put our tap tap tap homepage logo/link on the Camera+ product page until the very end of it, so as not to dilute the focus of trying to get the Camera+ message across.

Ads are one of the worst short-term strategies for profitability

If you’re looking to ads for shorter-term profitability, be very cautious… I’ve made the mistake in the past when I was creating Mac software where, for months on end, I threw back almost all of my profits into keeping the ads going. Although sales did grow, profits didn’t because most were being pumped back into paying for the ads. It’s a vicious circle.

The bottom line is that there are much more effective things that you can be doing to promote your products and this is where you should be focusing your time, energy, and money (some of these things could make for good future material here).

The past: how we used ads to climb the App Store charts

In the early days of the App Store, we bought up as much targeted ad inventory that we could get our hands on… banner ads on major sites, Google AdWords ads, roadblocks on various ad networks, weekly Daring Fireball RSS ads, etc. It was actually an effective strategy to get our apps up the charts because the barrier to entry was fairly low then (around 100 or so sales per day to get into the Top 100 Paid chart, versus well over 1,000 nowadays). Since ads for iPhone apps at that time cost significantly less than they do now, the sales resulting from the exposure of being in the charts had the potential to more than make up for the cost of the ads themselves.

It’s easy to see that this simple game-plan was a decent recipe for success, so long as you ran effective ads and you were selling quality apps that the mass market would embrace.

Fast-forward to the cold realities of the present

There are numerous reasons why the once effective success strategy just doesn’t work anymore…

First and foremost, there’s simply not enough targeted, cost-effective ad inventory to make the method we used work in today’s climate. Because it takes so many more sales to maintain a chart position, it’s completely impractical to “advertise your way into the charts” nowadays. You’d easily go broke in a heartbeat attempting to do so.

Ad rates have been driven up to astronomical levels. The number of people developing apps has gone up by an order of magnitude compared to the first few months after the App Store opened. VCs are foolishly throwing ridiculous amounts of money to iPhone startups… who are then foolishly throwing that money into ads for their apps.

And as a result, everything keeps getting driven up… those banner ads on major sites, Google AdWords ads, roadblocks on various ad networks, weekly Daring Fireball RSS ads, etc that I previously mentioned. And with these current rates, it’s nearly impossible for iOS developers to get any return on their investment.

When we were advertising heavily using Google AdWords about 2.5 years ago, our average cost-per-click bid rate was around $0.25. But for the same campaign these days, the bids now need to be over $2 each. That’s over 8 times what they used to be and this simply doesn’t work when you need to keep your app prices in the $1 to $3 range to do the volume you need to climb the ranks for the “charting effect” that causes sales to snowball. But even if the cost-per-click rate wasn’t currently so high, it doesn’t matter because the available inventory for those placements seems to be under 1,000 clicks per day now anyway. It doesn’t take a genius to see that Google AdWords is currently a no-win for iPhone app developers.

As another good, concrete example, the Daring Fireball RSS sponsorship that I mentioned in an early post was worth it for us then at the $1,250 rate it used to be (or less with discounts), but there’s absolutely no possible way we’d be able to make it work in today’s market conditions at the current $5,500 weekly rate. In the past, you’d be able to plunk down a thousand bucks and the resulting hundred or so sales of your app would land you back in the charts. You’d not even come close to making your money back on the resulting sales generated directly from the ad itself, but it didn’t matter because you’d then have a chance to ride back up the charts from the exposure of being in the charts themselves. And being up there is where the real profit is.

It’s not at all surprising to see the Daring Fireball ad rate jump 440% in that timeframe even though the traffic almost surely hasn’t gone up accordingly. The rates have obviously been driven up in the manner that I described above. Many of the people buying these weekly ads are indie iPhone developers so it’s very likely that our early posts here helped drive that increase. But it’s good to be able to set the record straight now in the hope that developers on tight budgets don’t end up making some very costly mistakes.

It’s all a matter of supply & demand and you can’t fault the people supplying the ad inventory for capitalizing on this situation. It’s just business. But the important thing to remember is…

Just because someone is satisfied with a bad deal doesn’t mean it isn’t a bad deal.

It may seem like a good thing at the time because you’re seeing others do it. But the ad racket is driven by turnover… so long as there’s a nice supply of the uninformed to go along, the people selling the ads are able to keep the racket going. And when things dry up, they usually have a string of advertisers waiting in the wings to fill the holes through “remnant” placements. Remnants are miracle workers for them because they make it seem like the ad spots are so effective that the same advertisers are able to buy spots over and over again. But the reality is that they’re getting the spots for a fraction of what they normally cost because they’d remain unfilled otherwise. And this helps start the cycle all over again.

Don’t believe me on any of this? Well, there’s a dead-simple way of confirming it… check out the apps that are being advertised in the places I’ve mentioned and see where they’re ranking in the App Store charts.

So, is there any hope?

One of the biggest keys to success is to be quick to adapt to rapidly changing market conditions. Again, you must realize that what’s been demonstrated to work in the past doesn’t necessarily work in the present.

It’s also important to be creating great products because mediocre definitely doesn’t cut it in such a competitive market. But even more important is that the buck doesn’t stop at creating a great product and you need to consciously put effort into the marketing side of things if you want a chance at succeeding.

I’d love to go into some of the secrets of the effective side of iPhone app marketing but this post has already gotten pretty long in just covering the big “don’ts” of it. But stay tuned and I’ll try to cover some of the “do’s” in the future…

tap tap tap is a leading iPhone and iPad app developer and publisher.

We’ve been creating top-notch apps since the App Store first opened. Our apps are used by literally tens of millions of people in all corners of the world. A few of our favorite and most popular apps we’ve created are:

I wonder if you folks realize the damage to developers of FREE applications (ones that use Ads to pay for them) this type of article will do. I appreciate that you’re saying you don’t need Ads, but painting it as “Ads don’t work” in a broad stroke like this could harm your fellow devs.

@Chris Moyer - Freemium/Ad-supported apps are a whole different ball game than what is being discussed here. This is about whether it’s a worthy investment to buy ad space, not whether you should be using in-app ad services (iAds, Google, etc.). People will continue to view/click ads regardless of whether app developers buy space or not.

John, i would agree traditional formats do not work for most paid apps. But have you ever tried systems like Tapjoy or Flurry where you can buy your DL at a price you judge decent for your business. You don t always need to be in the rankings to make a living..

When you have a rock solid app like Camera+ combined pretty savvy staff when it comes to social marketing no advertising dollars can create that level of success. But it should be mentioned that when you say no advertising dollars have been spent on Camera+ you are not factoring in how much more marketing (website, twitter, et al.) you are doing to promote it and the unrealized cost factors associated there. So if someone wants to kill advertising be ready to market like taptaptap. Keep up the good work.

When you mention the lack of targeted, cost-effective inventory are you speaking about contextual targeting (i.e. “iPhone aficionados probably read DF and/or app-review sites”) or actual device-specific targeting through networks like AdWords & others? Also, I’m curious if you’ve ever run any overlays or Promoted Videos on YouTube as those have always seemed comparatively cheap & effective in my experience and I’d be interested to hear some other perspectives. But perhaps it’s apples & oranges since what I was advertising fell a bit more on the Electronic Arts side of things than the Camera+ side. =D

Apple could help if they weren’t selecting the same “best selling apps” again and again. I’m thinking about Articles, Camera+ for example… There are good aps out there that rarely get noticed by Apple… and the customers. …

It’s kind of a good description of the situation out there but sorry for saying this but it’s kind of easy for you to say that you didn’t spend a buck on ads.
Then all of the Apple/iPhone blogosphere writes about your app the minute it comes out (or even few post before and after) and you’re one of the best known companies on that market you can skip the ads - sure. But 99% of (small) developers see no other way to spread the word.
You’ve started to give away iPads and “everyone” knew about it - even if I would have the money to give away iMacs it wouldn’t matter because noone would knew about it.
A real life example - when releasing our first app - SmartClock - Intelligent Alarm Clock I worked hard to get something for people which would buy our app. We decided to make the purchase of the app as risk free as possible (while still giving us profit) - everyone who buys our app gets his mone back (and even more) thanks to our deal with iPhone/iPad stands (because it’s nice to havenone when you have a cool clock on your device) manufacturers which gives them a special discount for their products. Maybe it’s not an iPad for 12 lucky people but still - a win for everyone. I still think it’s a nice, decent deal but the fact is - almost noone knows about it. We don’t have the media/blog coverage as you guys (it’s not like we didn’t try to get some - it’s just that those blogs prefered to write about Camera+ comeback [no offence - not your fault - and it’s a good app]). So as I said - we could have gave away 2x more stuff than you did at the same time and couldn’t even dream of the masses which knows about any update of your app (like instant 100k watching your every move on twitter - a number large enough that every indie developer would kill for even 10% of it).
I know that this comment might sound a little harsh - I didn’t want it to sound like that, but the fact is a lot of small, indie developers look up for you but you’re not one of them (luckly for you) anymore, you have resources which most of them can’t even dream of and it’s a bit like saying that you should quit your day job and start a company if you’re good at something because it worked for you (I know you didn’t say that but that’s what they will remember/understand - taptaptap doesn’t buy ads so I shouldn’t - it’s kind of like you said you did and now daring fireball costs 4x ads costs 4x more). Ehh - maybe I’m just complaining..

Having worked in advertising (although in a production role), I’d have to agree. It’s not that (all) agencies and reps are evil, just that the connection between advertising and profit is indirect and lags. It’s like moving a ball hanging at the end of a hundred foot rope—you can get it to go approximately where you want, but your control is hardly precise.

On a personal note, keep up helpful insights like this in favor of grumping about Apple or unreliable developers. I’ve come close to swearing off ever buying more taptaptap products after some of your blog entries.

I understand where you’re coming from John, but I think you need to put this in perspective. It’s easy for a popular app developer like Tap Tap Tap to say “Don’t advertise”. It’s like Bruce Springsteen saying “Don’t bother with a record label, publish your own stuff”.

You’ve already reached the pinnacle. You can pump out a tip calculator and sell 100,000 units because people already know your brand name. That’s not the case for most developers. Your mileage DOES vary.

I’m not saying that advertising is the best alterative for everyone, but flatly saying “don’t bother” isn’t necessarily the best advice either.

Ads may not be a “sure thing” like they were a few years ago, but they may be a good fit for certain apps in certain situations. I wouldn’t tell anyone to close off that avenue completely. Just tread lightly and be careful. Ads can be very expensive if not monitored and measured properly.

Always love John’s articles. I found when I place ads on Google it didn’t help at all. I’m having more success with my app advertising on Facebook and some women blogs. Facebook is pricey. I try to keep my budget around 30% of income. My app is just for women. http://www.ladybiz.net

I really wanted to read all of this article but gave up half way down due to having a pain in my head squinting trying to read the text it was written in. You need to have far more contrast between the background and the text colour!

Getting your apps reviewed on app review sites is a good form of free advertising. We at iTouchApps.biz do exactly this… If you are a developer & wish to get your app reviewed, please contact us with details & a promo code - we’ll get your app reviewed!

GREAT article… We are currently doing over 2 million downloads per month - monthly ad impressions are over 20 million and we do VERY well with advertising in our free apps…

The secret to maximizing ROI is to never become complacent. I am constantly tweaking exposure percentages across various networks for each of over 70 apps - you will find that some apps can have eCPMs 5 times higher than others…